Outback Steakhouse Closes 43 U.S. Restaurants as $33.2M Charge Triggers Severance Costs

Bloomin’ Brands has shuttered 21 Outback Steakhouse restaurants across the U.S. in October 2025, with 22 more slated to close as leases end through 2029. This move accompanies a $75 million investment through 2028 aimed at reviving the 670-unit chain amid seven straight quarters of flat or declining comparable sales.

The closures target underperforming sites showing traffic drops above system averages, high occupancy costs, and outdated facilities where upgrades would not yield returns. Employees at these locations receive transition bonuses and transfer options to nearby company outlets, part of a measured approach to shrink the footprint without abrupt brand damage.

Stock Pressure Mounts

Investor confidence has eroded sharply, with Bloomin’ Brands shares plunging from $25.80 in mid-2024 to $6.48 by January 2026—a 75% drop. The company halted its quarterly dividend, which once yielded 10.6%, to free up $50 million yearly for operations. Market value now sits at $552 million against approximately $962 million in debt, yielding a debt-to-equity ratio of 2.77 that limits maneuvering room.

In Q3 2025, restaurant-level operating margins fell to 9.2% from 11.1% a year earlier, reflecting cost squeezes. The quarter ended with a $45.9 million net loss, or $0.54 diluted loss per share, though adjusted figures beat expectations. Full-year 2025 guidance calls for adjusted diluted EPS of $1.10 to $1.15, with $190 million in capital spending.

Competitive Landscape Shifts

Rivals like Texas Roadhouse and LongHorn Steakhouse have gained ground. Texas Roadhouse prices entrées about $6 below Outback’s $29 average check and scores 85 on the American Customer Satisfaction Index, topping Outback’s 80. LongHorn Steakhouse saw 5.9% comparable sales growth in Q2 2025, against Outback’s 0.4%.

Portfolio siblings show varied results: Carrabba’s Italian Grill up 4.1% in Q3 2025 on value initiatives, Bonefish Grill at 0.8% after menu tweaks, and Fleming’s Prime Steakhouse at 1.2%. Together, Bloomin’ Brands’ 1,466 outlets generated over $3.7 billion in systemwide sales.

Turnaround Leadership Takes Helm

New CEO Mike Spanos, hired from Delta Air Lines in September 2024, brings operations expertise from his prior COO role there and experience leading Six Flags as COO and CEO during the pandemic from 2019-2021. Board Chairman Michael Mohan highlighted Spanos’ customer-first approach for steering mature businesses through tough times.

Supporting hires include CFO Eric Christel from Campbell’s Snacks and PepsiCo, former CFO Michael Healy as EVP of Strategy and Transformation, and Chief Human Resources Officer Jessica Mitory to bolster retention and culture.

Four-Pillar Overhaul Plan

The strategy directs $25 million to steak upgrades via premium sourcing and better grilling. Another $7 million revamps service, cutting peak-time server tables from six to four. Location refreshes at $400,000 each will update nearly all sites by 2028. Marketing pushes “authority in steak,” spotlighting cut thickness and preparation.

Value efforts feature the Aussie 3-Course deal—soup or salad, entrée, and cheesecake at $14.99, $17.99, or $20.99—with two-thirds of testers picking higher tiers. It lifted Q3 traffic in trials, though Outback’s 26% price edge over Texas Roadhouse persists amid lagging satisfaction.

Early tests at 42 sites yielded gains: steak changes boosted satisfaction 10 points in taste, value, reorder intent, and quality. Service tweaks added 8 points to return intent, 12 to attentiveness, and 9 to recommendation likelihood.

Industry Headwinds Intensify

Casual dining faces turmoil, with over 20 chains like Red Lobster, TGI Fridays, and Hooters filing Chapter 11 in 2024-2025. Private equity fueled 10 of 21 cases via heavy debt and sale-leasebacks. Operating costs rose 30% since 2019, forcing 31% menu hikes to hold 5% pre-tax margins, per National Restaurant Association data.

Food costs climbed 35% cumulatively through 2025, with 3.9% year-over-year inflation in August. Labor ate into 20-30% of revenue for 89% of operators, up from 25-28% historically, as diners resist price passes.

Analysts set price targets at $7.67 to $8.90, viewing the 6x P/E multiple as either bargain or trap. Turnarounds often take 18-36 months, leaving vulnerability to economic shifts. Bloomin’ Brands’ path demands precise execution on quality, service, upgrades, and messaging to match rivals and sustain premiums—or risk deeper cuts like peers.